Market headlines run on a small set of animal words. Here's the whole dictionary:
- Bull market — prices broadly rising. (Bulls attack upward.)
- Bear market — down 20% or more from the peak. (Bears swipe down.)
- Correction — a drop of 10–20%. Sounds clinical; feels bad; is routine.
- Dip — any smaller slide, usually a few percent.
- All-time high (ATH) — the highest price ever. Headlines treat it as a cliff edge; historically it's just… a Tuesday.
- Crash — a fast, violent drop. Rare, unforgettable, survivable.
How often does the scary stuff happen?
More often than headlines imply — which is exactly why it shouldn't panic you. Roughly: a correction every year or two, and a bear market every five to seven years. These aren't malfunctions. They're the market's normal breathing. If you invest for 30 years, you will personally sit through four or five bear markets. Plan on it.
Now zoom out
Every marked dot was a moment when smart-sounding people said "this time is different." Selling during those drops was the single most expensive mistake an investor could make — the recoveries did the heavy lifting. The lesson I carry: drops are the admission price for the long-term returns. You don't dodge them; you outlast them.
Terms you now know
- Bull / bear market — broadly rising / down 20%+ from the peak.
- Correction — a routine 10–20% drop.
- Dip — a small slide.
- All-time high — the highest price ever; more common than it sounds.
- Drawdown — the fall from a peak to a bottom, in percent.
Check yourself
The market falls 12% over two months. What is that called, and how unusual is it?
A correction — and it's routine. One happens roughly every year or two. It's the market breathing, not breaking.
You'll invest for 30 years. Roughly how many bear markets should you expect to live through?
Four or five. Expecting them ahead of time is what makes it possible to hold through them.